If you are a long term investor, you tend to always make returns in equities. In fact, equity shares have known to outperform other asset classes in the long term. We have selected a few stocks that offer great opportunities for long term investors. These include stocks that have a very low debt to equity ratio and which have shown good growth over the years. These stocks have the tremendous potential to generate money in the long term.
Some of them are from very fast growing sector like construction, agrochemicals and ofcourse, the fast improving PSU banking space.
Matrimony.com offered its shares to the public at an IPO price of Rs 985. Today, you are getting the stock 20 per cent lower at just Rs 785. The reason for the sharp fall in the share price is that several big funds sold heavily into the stock, pulling the stock down to the current levels.
However, at these rates the stock is not a bad bet. Recently, the management of the company guided for a growth of 18 per cent. The wedding services business is expected to see a staggering growth of 100 per cent.
Hence, the wedding business and the match-making business together would account for some superb growth.
Matrimony.com: Savings in rentals likely to boost net profits
The company would be utilizing the IPO proceeds for a premises of its own and all repaying overdrafts. Until the building is complete the company would benefit from interest income, as also the repayment of overdrafts. India also has one of the youngest population in the world, which means demographics favour a company like Matrimony.com.
Internet penetration is also rising sharply, which means, the business prospects could improve further. In fact, after the sharp fall in the stock, the shares are now trading at a p/e of just 38 times. This has dropped from 48 times post issue EPS. The stock at Rs 785 is not a bad bet at all for long term investors.
The one advantage for investors buying into Tata Motors is the fact that the stock has fallen from levels of Rs 598 to the current levels of Rs 401. In fact, the stock had dipped to as low as Rs 375 recently.
So, apart from the stock falling there are a number of other reasons to be buying the stock of Tata Motors.
The first is that the management has definite plans to cut cost and boost overall sales. The company already plans to make Tata Nano more profitable, apart from increasing the sales of commercial vehicles. In the past the company has lost share to Ashok Leyland in this segment.
Tata Motors also plans to change its complete manufacturing footprint to save on costs and make them more efficient. It also intends to stop using certain part facilities to bring down costs.
New launches will drive growth at the company
A spate of new launches will drive growth at Tata Motors and this is largely going to come from the JLR stable. The ramp up in the New Discovery and Velar will ensure sales rebound for Landrover, while the new production capacity in Slovakia is expected to meeting requirements in Europe.
Margins for JLR are expected to improve a good deal, which should push profitability higher in the coming months and days. Tata Motors is also expected to launch its electric vehicle I-Pace in 2018 & E-Pace later this year. The margins of the company which took a hit for the quarter ending June 30, 2017 are also expected to improve as forex losses reverse. By 2018-19 the company should report an EPS of Rs 44, which makes the stock very cheap a p/e of around 9 times. A good stock to buy for the long term. Check stock quote of Tata Motors here
Lupin is the second largest pharma company in India and the sixth largest generics pharma company globally. In the last few quarters we have seen investors heavily dumping pharma stocks on account of US FDA worries and also on account of squeeze of margins in the US.
In line with this, Lupin Ltd has also seen its stock nosedive from levels of Rs 1,800 to the current price of Rs 1032. Going ahead complex and branded generics is likely to help growth in the US markets and this is what Lupin is likely to focus on.
Between 2017 and 2020, Lupin wants to be a leading generics player with a larger complex generics mix. It also plans to increase its geographic spread.
In 2017, the company achieved quite a few milestones, with its Goa EIR receiving US FDA, the company also saw its somerset, NJ, New block commissioned, saw Albuterol MDI ANDA filing and a new plant in Sikkim and Japan being innaugurated.
The way forward for Lupin
Going ahead the company may face some margin pressures in the coming few quarters. However, the road ahead looks a little optimistic as well. The company in 2017 had 154 ANDA pending filings
with record 37 filings and 34 approvals in FY17. This should augur well as and when approvals happen. The 28 pending FTFs target a market size of $12.4 billion. The company is also making an enhanced investment in inhalation, biosimilars and injectables. Recently, one of the company's plants were inspected by the US FDA and one 483 observation was issued, which was cleared during the inspection itself. We believe that though there are temporary issues with margins and US FDA approvals, Lupin should report an EPS of Rs 60 by 2018-19. This should take the stock to Rs 1200 from levels of Rs 1023. Lupin is a good stock to buy for the long term. Check stock quote of Lupin here
Best small cap stocks to buy
In the past some small cap and mid cap stocks have given excellent returns. In fact, small cap stocks have beaten returns from large cap stocks, which have made them excellent bets for the long and short term. Please click on the link to see some excellent small cap stocks ideas.
Taxation of shares
It is important to note that shares do not attract a long term capital gains tax. However, if you sell shares before one year, they attract a sort term capital gains tax of 15 per cent. So, before investing it is very important to consider the tax liability on the same. On the other hand it is also important to note that the tax liability is almost similar to those of equity mutual funds. One important thing to note is that there is no long term capitals gains if you hold shares and sell them at a profit of more than one year.
The article is not a solicitation to buy, sell in securities mentioned in the article. Greynium Information Technologies Pvt Ltd, its subsidiaries, associates and the author do not accept culpability for losses and/or damages arising based on information in this article.